DOL Proposes Rule Requiring Federal Contractors and Subcontractors to Submit Equal Pay Reports

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The year was 2081, and everybody was finally equal. They weren’t only equal before God and the law. They were equal every which way. Nobody was smarter than anybody else. Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else. All this equality was due to the 211th, 212th, and 213th Amendments to the Constitution, and to the unceasing vigilance of agents of the United States Handicapper General.

– Kurt Vonnegut, Harrison Bergeron (1961)

On April 8, 2014, President Obama issued a Memorandum, “Advancing Pay Equality Through Compensation Data Collection,” in which he instructed the U.S. Department of Labor (DOL) to propose a rule within 120 days to collect summary compensation data from federal contractors and subcontractors.

Today, the DOL issued a proposed rule that would require federal contractors and subcontractors to submit an annual “Equal Pay Report” on employee compensation to the Office of Federal Contract Compliance Programs (OFCCP). In its press release, the DOL explained that the proposed Equal Pay Report would “help OFCCP direct its enforcement resources toward contractors whose summary compensation data suggests potential pay violations.” Indeed, the notice of proposed rulemaking states that the OFCCP “would analyze the information collected on the Equal Pay Reports and, along with other available data, develop objective industry-based standards for compensation differences, and prioritize contractors and subcontractors for evaluation whose summary data show discrepancies that indicate possible compensation violations.”

This proposed rule would apply to employers that file EE0-1 reports, have more than 100 employees, and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days.

The Equal Pay Report would require employers to disclose: (1) total number of workers within a specific EEO-1 job category by race, ethnicity, and sex; (2) total W-2 earnings defined as the total individual W-2 earnings for all workers in the job category by race, ethnicity, and sex; and (3) total hours worked defined as the total number of hours worked for all workers in the job category by race, ethnicity, and sex.  The reporting period would be from January 1 through December 31, with a filing deadline of March 31.  The data would be reported through a web-based portal. Employers with less than 150 employees or $150,000 in government contracts would be required to keep Equal Pay Reports for one year, while employers with 150 or more employees or $150,000 or more in government contracts would be required to keep Equal Pay Reports for two years.

If an employer fails to comply with filing requirements, the contract may be canceled, terminated, or suspended in whole or in part and the contractor may be declared ineligible for further government contracts.

While the proposed rule is limited to federal contractors and subcontractors, the governmental gathering of pay information for purposes of targeting employers is likely to extend beyond federal contractors and subcontractors. For instance, noting that the Equal Employment Opportunity Commission (EEOC) is seeking to initiate a pilot project on gathering such information, the notice of proposed rulemaking states that the “OFCCP looks forward to continuing to work with EEOC on pay data collection, including sharing information resulting from this proposed rule and engaging with the EEOC on the results of its pilot project once it is completed” and “intends to coordinate with EEOC on this data collection proposal.” In addition, the OFCCP states that it has consulted with DOL Agency Task Force members, including the Women’s Bureau, the Wage and Hour Division, and other federal agencies on the Task Force.

The rule will be published in the Federal Register on August 8, 2014, and all comments must be received by November 6, 2014.

Stay tuned as science fictional dystopia becomes reality…

Topics:  Barack Obama, Data Collection, DOL, Equal Pay, Federal Contractors, OFCCP, Reporting Requirements, Rulemaking Process, Subcontractors

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Rights Updates, Government Contracting Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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